Major cryptocurrency exchange Binance plans to tokenize more stocks on its platform.
New Stock Tokens Coming To Binance
The exchange said it would list Microstrategy (MSTR), Apple (AAPL), and Microsoft (MSFT) stocks as tokenized tokens, per a notice posted on its website. This follows the earlier listing of Coinbase and Tesla tradeable tokens listed earlier this month.
Binance’s stock tokens are referred to as tokenized equities that can be traded on traditional stock exchanges.
The new arrangement will provide Binance users with the opportunity to qualify for economic returns on the underlying shares, including potential dividends.
Instructively, the tokens will be denominated in the exchange’s stablecoin, BUSD.
Furthermore, interested retail investors can purchase as low as one-hundredth of a regular stock using BUSD.
The exchange will list MicroStrategy’s tokens later today, at 1:30 PM UTC. Apple tokens will follow two days later, on April 28th. Microsoft’s stock tokens would be added much later, on April 30, 2021.
These tokenized shares qualify their holders for economic returns, including dividends. Each tokenized stock is backed by a depository portfolio held by German investment firm CM-Equity AG.
Regulations On Binance Stock Tokens
Tradable securities are a new turf for Binance, which explains why regulators are hot on the heels of the exchange.
In Hong Kong, there are already concerns about whether or not the exchange secured a license to market security tokens in the region. UK financial watchdog, the Financial Conduct Authority (FCA), is also investigating Binance for securities law compliance.
Although the German regulator BaFin has been silent on whether an investigation into Binance’s stock tokens will be conducted or not.
However, BaFin maintains that if the tokens are transferable and traded on a cryptocurrency exchange for economic gains, then they could be regarded as securities and must operate with a clearly defined prospectus.
In an interview with Bloomberg, Binance CEO Changpeng Zhao said that all its products adhere to the European Union’s MiFID II.
Unlike BaFin’s claim, Zhao emphasized that there is no need for any prospectus because the tokens can only be bought and sold within the walled garden of CM-Equity.
The crypto trading exchange CEO clarified that the stock tokens might entitle investors to potential dividends; it doesn’t confer any voting rights relating to regular securities on holders.
Meanwhile, trading in securities falls under stiff regulation by governments across the world.
Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system. When not immersed in the daily events in the crypto scene, he can be found watching legal reruns or trying to beat his Scrabble high score.